The HDFC Gold ETF is an Exchange Traded Fund which will accumulate money from those who invest and produce returns by following the prices of gold. It is accounted that 90% to 100% of the accumulated capital will be committed in Gold after which the ETF units will be made out, the residual 10% or less will be held in reserve in debt and in the securities of the money market to tender liquidity. This is exactly the place where the tracking error gets inserted. On the other hand, as the cost of Gold ETF will be moving as trading carries on a tick by tick footing, it will be achievable to benefit from trading activities of HDFC Gold ETF.
Objective of HDFC Gold ETF
The objective of the investment Scheme is to produce returns that are aligned with the operation of gold, depending on tracking errors. The system also might pursue gold lending, and /or deposit gold in banks for a fee as and when allowed by SEBI. There will also be an investment made in debt and money market securities so as to cope with the liquidity demands.
HDFC Gold ETF SIP
Each month on a particular date an amount you prefer is committed in a mutual fund plan of your preference. HDFC Gold Fund provides the alternative of committing via SIP – investing in managed investment funds. This means that an amount previously decided by you will be invested at standard gaps instead of investing a lump sum amount at a single time. Thus, the cost of your investment can be averaged over a phase of time. You get the option of SIP either on a monthly basis or even on a quarterly basis. The minimum amount is as under:
- For the monthly alternative – Rs. 500 and in products of Rs. 100 and
- For the Quarterly alternative – Rs. 1500 and in products of Rs. 100.
- HDFC Gold ETF helps in Investing in gold through the SIP on either a monthly or a quarterly basis.
- You get the alternative of STP & SWAP.
- Great liquidity alternative when equated with the physical gold or even any other type of gold.
- Limpidness of gold is certain.
Tax Implications of HDFC Gold Exchange Traded Fund
- Long term capital gain will be taxed at the rate of 10% or 20 % and indexation is applicable.
- Short-term Capital Gains will be taxed according to the structure prevailing and applicable to the particular investor.
- There is no Wealth Tax.